The Brickworks Limited (ASX: BKW) share price has gone up more than 50% over the last year.
Brickworks is a diversified property business. It has a number of building products such as bricks, roofing and precast. But the company also has investments including a 50% stake of a joint venture trust with Goodman Group (ASX: GMG) and its holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares.
The business has experienced growth in all areas.
Soul Patts experiences share price growth
Brickworks owns a 39.4% stake in Soul Patts, which has a diversified portfolio of investments in listed and unlisted companies. Major investments include Brickworks, TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC) and Australian Pharmaceutical Industries Ltd (ASX: API).
In the first half of FY21, Brickworks' shareholding of Soul Patts increased by $720 million. Over the last 12 months, the Soul Patts share price has risen by around 65%.
Soul Patts announced on 22 June 2021 that it plans to take over the listed investment company (LIC) Milton Corporation Limited (ASX: MLT). The Soul Patts share price has increased by more than 9% since that announcement.
Property Trust
In June, Brickworks said that it's expecting to report record property earnings in FY21, with property earnings before interest and tax (EBIT) of between $240 million to $260 million, driven by the continued increase in the value of its property trust.
Management explained that it has seen strong demand and sustained growth in the value of its property trust over a number of years. The COVID-19 pandemic has fuelled this growth, by accelerating industry trends towards online shopping and increasing the importance of well-located distribution hubs and sophisticated supply chain solutions.
Brickworks said that as a result of sales and an increase in transaction pricing, and an independent valuation of its property trust assets, the joint venture saw a revaluation profit of around $100 million which will be recorded in the second half. This represented Brickworks' half of the valuation gain.
Practical completion of the Amazon facility at Oakdale West is expected to occur in the first half of FY22. The even larger Coles Group Ltd (ASX: COL) distribution warehouse is under construction, with completion expected in early FY23.
Building products
When it released its trading update, Brickworks said that it was seeing sales momentum in both Australia and North America.
In local currency terms, it's expecting a higher EBIT from both the North American and Australian building product divisions. In Australia, sales were particularly strong in Queensland and Western Australia, but the availability of some materials were causing delays.
In the US it was seeing a strong rebound in sales volumes to housing customers in May. A strengthening of commercial sales was anticipated as delayed and deferred projects re-commence.
Brickworks share price
Brickworks has seen all of its divisions benefit over the last year as they recover and grow.
Citi currently rates Brickworks as a buy with a price target of $27.20.
